Principles of Economics: Microeconomics - The Great Economic Problem

In this video, we discuss how different markets are linked to one another. How does the price of oil affect the price of candy bars? When the price of oil increases, it is of course more expensive to transport goods, like candy bars. But there are other, more subtle ways these two markets are connected. For instance, an increase in the price of oil leads to an increase in demand for oil substitutes, like ethanol. And when the supply of oil falls, oil should shift to higher-valued uses. But, which uses? How do we decide where to use less oil? This brings us to the great economic problem: how to most effectively arrange our limited resources to satisfy our needs and wants. Which approach — central planning or the price system — is better at solving this problem? Join us as we explore this question further. Microeconomics Course: https://mru.io/4fs Next video: https://mru.io/9jj Help us caption & translate this video! http://amara.org/v/GGJQ/ 00:00 Introduction 00:30 How oil affects candy bars 02:18 How oil affects brick driveways 03:49 Solving the great economic problem 04:30 Central planning approach 05:06 Central planning problem 1: Too much information 06:31 Central planning problem 2: Too few incentives